May 25, 2010
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News: Small Businesses Ask Legislatures For Protection
While credit cardholders have begun to realize the benefits of new card reform which became effective on February 22nd, small business owners remain unprotected and vulnerable. Lawmakers deliberately excluded small business credit cards from the act allowing lenders to continue imposing high interest rates and unfair penalties. A recent study conducted by BillShrink.com, indicates that lenders have increased small business credit card interest rates six times faster than consumer cards. The average small business card is 13.7 percent higher in April than in October 2009. On the other hand, consumer cards have only increased on the average by 2.4 percent higher. BillShrink utilized data collected from the nation's top card companies including Chase, Bank of America, Capital One, CitiBank, Wells Fargo and American Express.
Attempts to include small business protection in the credit card reform legislation failed with the passing of the law but advocates have not given up. However, small businesses are not ready to give up. Lobbyists have embarked on Congress and the Federal Reserve to include rules that will provide greater protections for small business owners. Among them is Molly Brogan, spokeswoman for the National Small Business Association. Brogan believes that without protection, small businesses will continue to see excessive increases in credit card interest rates. Opponents say that the small businesses are at great risk of failure. According to Nessa Feddis, Senior Counsel for the American Bankers Association, nearly 50 percent fail within the first five years.
The National Small Business Association reports that 64 percent of over 450 survey respondents said that their credit card terms and fees have worsen over the past year. In support of small businesses, Representative Jackie Speier (D-CA) supports legislation that will provide small businesses with less than 50 employees with greater protections. On a positive note, Bank of America, American Express and Capital One have voluntarily applied some of new card rules to small business accounts.